The short sale process generally begins when the homeowner approaches his lender with concerns about his ability to continue making his mortgage payments. At this point the homeowner may or may not be current on his mortgage payments, but the homeowner has some reason to believe that falling behind is certainly a real possibility. Typically the homeowner is experiencing some form of economic hardship such as loss of employment, divorce and reduction in income, medical bills, or even employment relocation. The lender will immediately send the homeowner a packet of materials designed to help the lender make two determinations.
First, the lender will seek to evaluate the homeowner’s financial situation in order to determine if there is a reason that the homeowner may be unable to meet his mortgage payments, and if so is there any way that the homeowner can rectify this on his own.
Second, the lender will provide information regarding payment alternatives for the homeowner to consider, including loan modification, certain Federal modification programs, and other alternatives including a short sale. In the discussions that follow the lender and the homeowner may agree to try alternative means of keeping the homeowner current on his payments, but at some point an agreement may be reached that the homeowner is going to try to sell the property as a short sale. In this process the lender provides the homeowner with a short sale package containing very specific documents that must be submitted to the lender for review, as well as specific processes that the homeowner must follow before a short sale will be approved by the lender. Included in the package are directions regarding documents and processes that the Real Estate Agent must comply with. One key to successfully negotiating a short sale is the absolute adherence to the specific requirements of the lender, including timely response to every document request. Another key is to work with an Agent that is familiar with the short sale process and recognizes the necessity for adhering to the requirements of the lender.
The short sale evaluation process does not begin until the lender has received all of the required paperwork from both the homeowner and his Agent. Once the review begins the Agent and the homeowner enter into the process of listing and selling the property with the understanding that a short sale raises a number of considerations not common to the standard sale. Again, an Agent familiar with the short sale process can identify these differences and how to most favorably deal with them.